1099 MISC

What is Form 1099-MISC?

Form 1099 Miscellaneous is an IRS tax form that is used to report payments made to contractors by business entities. Payments reported on 1099-MISC forms can include rent, royalty, prizes, and awards and substitute payments in lieu of dividends. A 1099-MISC form for a contractor is the same as a W-2 form for an employee. The form reports the total amount paid by the business to an individual during the course of a business or trade. Personal payments are not reported.

Businesses must file this form for each person to whom they have paid during the year. A business must provide a statement to the recipient to whom the payment is made. A business must also file this form with the IRS either electronically or on paper.

Generally payments made to corporations are not reported on this form, but there are some exceptions to this rule. Medical and healthcare payments, attorneys’ fees, etc. must be reported on this form. Employees' business expense reimbursements are not reported on this form. Generally, payments made to employees are reported on Form W-2. Generally, payments made to general contractors are reported in box 7.

Who needs to file Form 1099-MISC?

All businesses that are operating for the purpose of making a gain or profit need to file this form if they meet any of the conditions below. Nonprofit organizations, trusts, cooperatives, federal, state, or local government agencies are also required to report payments.

When is this form filed?

A business is required to file if it:

Paid more than $10 in royalties, or brokerage payment, or tax-exempt interest

Paid at least $600 in rents, services, prizes and awards, other income payments, and medical and healthcare payments

Paid at least $600 to an attorney

Made direct sales of at least $5000 of consumer products

Withheld any federal income tax under the backup withholding rules

What is the deadline to file Form 1099-MISC?

The deadline to file this form with the IRS is the end of February if filing on paper. If filing electronically, then the deadline is at the end of March. However, the deadline to provide a recipient copy is at the end of January.

Important Note for 2017 year 1099-MISC form:The due date to e-file 1099-MISC is January 31, 2018 if payments are reported in Box 7. The due date to furnish payee statement remains the same.

What is the penalty for failure to file Form 1099-MISC?

The IRS imposes heavy penalties if a business fails to file or fails to file correct information. There is penalty for not providing recipient copies. The penalty increases with time. So, even if you have not filed your form in time, we encourage you to file as soon as possible.